Consumer Confidence Tumbles to Lowest Level in 31 Years
August 17 2011 by ChiefExecutive.net
Thomson Reuters and the University of Michigan have been collecting data on U.S. consumer spending since 1952 with the Index of Consumer Sentiment. Once a month, the index takes stock of consumer perceptions about spending and spending projections. August 2011 brought the lowest level of consumer confidence since the recession in 1980; this month’s 54.9 was actually the third lowest score in the history of the index, according to an article from AdAge.
To put this into context, the lowest level of confidence in 2008 was 55.3. This month’s low was also a huge 13.8 percent drop from July 2011’s score of 63.7. And so, CEOs (especially in consumer-facing industries) may expect decreased revenues in the months ahead.
Consumer spending was on the upswing in July and was higher than expected in July with a 0.5 percent increase in both retail and automobile sales.
And according to the Wall Street Journal, the decreased confidence that ushered in the month of August has not hampered consumer spending. The Journal cites Redbook Research’s stats that spending in the first week of August was 0.7 percent higher than in July.
So, confidence alone does not drive spending habits. The Journal noted that jobless claims and the financial markets’ performance will be the true influences on how (and whether) consumers spend.